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TUI AG (TUI)
13 December 2017
Full year results to 30 September 2017
1 Assuming constant foreign exchange rates are applied to the result in the current and prior period
2Underlying EBITA has been adjusted for gains/losses on disposal of investments, restructuring costs according to IAS 37, ancillary acquisition costs and conditional purchase price payments under purchase price allocations and other expenses and income from one-off items
3 Reported EBITA comprises earnings before net interest result, income tax and impairment of goodwill and excluding the result from the measurement of interest hedges
4 For calculation of underlying earnings per share please refer to page 58 of the Annual Report
5 For reconciliation of earnings before tax to underlying EBITA, please refer to page 57 of the Annual Report
6 Leverage ratio is calculated as the ratio of gross debt (including net pension liabilities and discounted value of operating leases) to reported EBITDAR
7 ROIC (return on invested capital) is calculated as the ratio of underlying EBITA to the average for invested interest bearing capital for the Group or relevant segment
8 Percentage growth in dividend per share is calculated off the base dividend in respect of FY16 of EUR0.58 per share (excluding the additional 10% announced at the time of the merger)
Annual Report and Investor & Analyst Presentation and Webcast
A full copy of our Annual Report can be found on our corporate website: http://www.tuigroup.com/en-en/investors. A presentation and webcast for investors and analysts will take place today at 09:30 GMT / 10:30 CET. The presentation will be made available via our website shortly beforehand. Details of the webcast, which will be available for replay, will also be available there.
* includes the adverse impact of higher than normal levels of sickness in TUI fly at the start of the financial year (EUR24m) and the impact of the Air Berlin insolvency (EUR15m); excluding these items, and at constant currency, Source Markets variance was +EUR17m and Central Region variance was +EUR26m
TRADING FOR FUTURE SEASONS IS PROGRESSING WELL OVERALL
Demand for our holidays, hotels and cruises remains strong. In Hotels & Resorts we have seven openings scheduled to date for our core brands in FY18. These include Robinson clubs in the Maldives and Thailand, Riu hotels in Mexico and Bulgaria, two Blue Diamond properties in Dominican Republic and a Sensatori in Rhodes. We are also continuing to streamline our portfolio, with further repositionings under the TUI Blue brand currently planned for four existing hotels. We continue to see strong demand for the Western Mediterranean and Caribbean, which are already operating at a high level of occupancy and rate, and expect to see some improvement in demand for Turkey and North Africa, including from our own Source Markets.
In May 2018 we will launch two ships - the new Mein Schiff 1 for TUI Cruises in Hamburg, and the Marella Explorer (previously Mein Schiff 1) in Palma de Mallorca. Further launches will follow in Summer 2019 for TUI Cruises and Marella Cruises, as well as two new expedition ships for Hapag-Lloyd Cruises in 2019. Bookings for our new ships and the existing fleet are progressing very well, with a year on year increase in fleet yield for each of the three brands.
Source Markets trading is progressing well, in line with our expectations. Winter volumes are ahead of prior year, with strong growth in bookings for Thailand, Cape Verde, North Africa and Cyprus. Demand is more subdued for the Caribbean following the hurricanes in September, however this is offset by demand for other destinations with overall long haul bookings up 4%. Both Nordics and Germany have continued their strong performances. In Germany, we continue to build market share with a good trading margin performance, with particularly strong demand for Canaries, North Africa and Thailand. In Nordics, strong volume growth continues and reflects the strategy to grow early volumes. The rollout of our yield management system is also helping to drive a strong margin performance. In Benelux, both volumes and average selling price are ahead of prior year.
Despite the Brexit backdrop, the UK continues to deliver a resilient performance in line with our expectations. Year on year bookings and selling price for Winter 2017/18 reflect the very strong start in prior year trading (when bookings were up 19% including Marella Cruises) and impact of currency inflation. Load factor and percentage of the UK programme sold remain in line with prior year. We are also very pleased with the progress of the UK rebrand, with unaided awareness of the TUI brand performing ahead of our original expectations for this stage. As expected, although UK demand for holidays abroad remains strong, margins across the package holiday market are normalising, primarily as a result of the weaker Pound Sterling. Nonetheless, our margins remain healthy and we are well positioned competitively. TUI is the clear market leader in package holidays in the UK, with a strong net promoter score of 55 in FY17, high levels of direct and online distribution, and a highly integrated and efficient business model.
2 These statistics are up to 3 December 2017, shown on a constant currency basis and relate to all customers whether risk or non-risk
For Summer 2018, Source Markets trading is performing in line with our expectations, albeit at a very early stage. As usual for this point in the booking cycle, only the UK is more than 20% booked. UK booked revenue (excluding Marella Cruises) is up 2%, with bookings slightly below the strong start to prior year (when bookings were up 9% including Marella Cruises) and average selling price up 4%.
Our strategy of hedging the majority of our jet fuel and currency requirements for future seasons, as detailed below, remains unchanged. This gives us certainty of costs when planning capacity and pricing. The following table shows the percentage of our forecast requirement that is currently hedged for Euros, US Dollars and jet fuel for our Source Markets, which account for over 90% of our Group currency and fuel exposure.
The Executive Board and the Supervisory Board are recommending a dividend of 65 cents per share in respect of the financial year 2017. Subject to approval at the Annual General Meeting on 13 February 2018, shareholders who held relevant shares at close of business on 13 February 2018 will receive the dividend on 16 February 2018.
Three years after the merger, we are a stronger, more integrated and better strategically positioned business. Having delivered the merger synergies in full and disposed non-core businesses, the post-merger phase is now complete.
Looking ahead we continue to expect to deliver double digit annual earnings growth with less seasonality, strong cash conversion and strong ROIC performance. This will be driven increasingly by market demand and digitalisation benefits, as well as disciplined expansion of own hotel and cruise content.
We have a clear ambition - strong strategic positioning, strong earnings growth and strong cash generation, with underlying EBITA doubling between FY14 and FY20.
With regard to the ongoing Brexit negotiations between the UK and the EU, we expect and strongly encourage those involved in the negotiations to have a workable solution in place for the airlines, including that current arrangements are extended until such a solution is reached. Whilst we are not able to control the outcome of these negotiations, we are putting contingency plans in place in order to manage potential disruption to our operations.
Trading for future seasons is progressing well overall, and our balanced portfolio of markets and destinations and strong competitive position leave us well placed to deliver further growth, despite external factors which sometimes influence certain parts of the business. We therefore expect to deliver at least 10% growth in underlying EBITA in FY181 and extend our previous guidance of at least 10% underlying EBITA CAGR to FY201.
The following detailed guidance is given in respect of FY181:
1 Assuming constant foreign exchange rates are applied to the result in the current and prior period and based on the current Group structure
ANNUAL GENERAL MEETING AND Q1 FY18
TUI Group will hold its Annual General Meeting and issue its Q1 FY18 Report on 13 February 2018.
ANALYST & INVESTOR ENQUIRIES
|ISIN:||DE000TUAG000, DE000TUAG281, DE000TUAG299|
|End of Announcement||EQS News Service|
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